Southern Company announces pricing of $1.5 billion in aggregate principal amount of Series 2023A 3.875% Convertible Senior Notes due December 15, 2025

Rhea-AI Summary

Southern Company (NYSE: SO) announced the pricing of $1.5 billion in Series 2023A 3.875% Convertible Senior Notes due December 15, 2025, aimed at qualified institutional buyers under Rule 144A. The offering includes an option for initial purchasers to buy an additional $225 million in notes. Interest is set at 3.875% paid semiannually, with an initial conversion rate of 11.8818 shares per $1,000 principal, equating to a price of $84.16 per share, representing a 30% premium over the last price on February 23, 2023. Net proceeds will be used to repay commercial paper borrowings and for corporate purposes. The offering is expected to close on February 28, 2023.

Positive

• Successful pricing of $1.5 billion in convertible senior notes.
• Attractive interest rate of 3.875%, providing favorable financing conditions.
• Conversion rate provides potential for shareholder value, linked to common stock performance.

Negative

• Issuance of convertible notes may lead to potential dilution of existing common shares upon conversion.
• Dependence on ability to raise funds subject to market conditions and investor interest.

ATLANTA, Feb. 23, 2023 /PRNewswire/ -- Southern Company (NYSE: SO) today announced the pricing of $1.5 billion in aggregate principal amount of its Series 2023A 3.875% Convertible Senior Notes due December 15, 2025 (the "Convertible Notes") in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act").  In addition, Southern Company granted the initial purchasers of the Convertible Notes an option to purchase, for settlement within a period of 13 days from, and including, the date the Convertible Notes are first issued, up to an additional $225 million in aggregate principal amount of the Convertible Notes. The offering is expected to close on February 28, 2023, subject to customary closing conditions.

Interest on the Convertible Notes will be paid semiannually at a rate of 3.875% per annum.  The Convertible Notes will have an initial conversion rate of 11.8818 shares of Southern Company's common stock per $1,000 principal amount of the Convertible Notes (which is equal to an initial conversion price of $84.16 per share of common stock), representing an initial conversion premium of approximately 30.00% above the last reported sale price of Southern Company's common stock on February 23, 2023.  The conversion rate is subject to adjustment in certain circumstances.  The Convertible Notes will mature on December 15, 2025, unless repurchased or converted in accordance with their terms prior to such date.

Prior to September 15, 2025, the Convertible Notes will be convertible only upon the occurrence of certain events and during certain periods.  Thereafter, the Convertible Notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.  Upon conversion, Southern Company will pay cash up to the aggregate principal amount of the Convertible Notes to be converted and pay or deliver, as the case may be, cash, shares of Southern Company's common stock, or a combination of cash and shares of common stock, at Southern Company's election, in respect of the remainder, if any, of Southern Company's conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted. 

Southern Company intends to use the net proceeds from this offering to repay all or a portion of its outstanding commercial paper borrowings.  Southern Company intends to use any remaining proceeds for general corporate purposes, which may include investment in its subsidiaries.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful.  The offer and sale of the Convertible Notes and the shares of common stock issuable upon conversion of the Convertible Notes, if any, have not been, and will not be, registered under the Securities Act or the securities laws of any other jurisdiction, and the Convertible Notes and such shares of common stock may not be offered or sold without registration or an applicable exemption from registration requirements.

About Southern Company

Southern Company (NYSE: SO) is a leading energy provider serving 9 million residential and commercial customers across the Southeast and beyond through its family of companies. The company has electric operating companies in three states, natural gas distribution companies in four states, a competitive generation company, a leading distributed energy distribution company with national capabilities, a fiber optics network and telecommunications services.

Cautionary Notice Regarding Forward-Looking Statements

Certain information contained in this release is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning the closing of the offering of the Convertible Notes and the expected use of proceeds from the offering. Southern Company cautions that there are certain factors that can cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Southern Company; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Southern Company's Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: global and U.S. economic conditions, including impacts from recession, inflation, interest rate fluctuations, and financial market conditions, and the results of financing efforts; access to capital markets and other financing sources; changes in Southern Company's credit ratings; and catastrophic events such as fires, earthquakes, explosions, floods, tornadoes, hurricanes and other storms, droughts, pandemic health events, political unrest, wars, or other similar occurrences. Southern Company expressly disclaims any obligation to update any forward–looking information.

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SOURCE Southern Company

FAQ

What are the key details of Southern Company's convertible senior notes offering dated February 23, 2023?

Southern Company priced $1.5 billion in 3.875% Convertible Senior Notes due December 15, 2025, with a closing date expected on February 28, 2023.

How will Southern Company utilize the proceeds from the convertible notes offering?

The proceeds will be used to repay outstanding commercial paper borrowings and for general corporate purposes.

What is the conversion rate for Southern Company's convertible senior notes?

The initial conversion rate is 11.8818 shares per $1,000 principal amount, translating to a conversion price of $84.16 per share.

What risks are associated with Southern Company's convertible notes offering?

Potential dilution of existing shares upon conversion and dependency on favorable market conditions for successful funding.